The MAN Group in Q3/2007: Strong growth rate sustained

• Q3 operating profit: 378 million (up 36% from 278 million); three-quarter (3Q) operating profit of 1,099 million tops for the first time the one billion mark (up 46%)
  
• Order intake rising in an ongoing congenial market 17% to 4.7 billion in Q3; 3Q up 19% to 14.3 billion
  
• Q3 sales up 12% to 3.5 billion; nine-month sales up 12% to 10.3 billion
  
• Continued profitability improvements in all areas raises 3Q ROS from 8.2% to 10.7%
  
• Earnings per share (EpS) up from 3.51 to 5.98; excluding the Q2 nonrecurring result of 241 million, to 5.07
  
• Prospects 2007: for all of 2007 we expect an order intake increase of over 10%, sales of around 15 billion, and an ROS at the 3Q level of 10.7%
  
  

Best-ever 3Q operating profit: a 46% hike
In an ongoing congenial market, the MAN Group continued unabated its growth of H1 into Q3/2007. Order intake, sales and operating profit all showed double-digit percentage gains: 17% order intake, 12% sales, and 36% operating profit rises in 3Q endorse the rapid growth shown by the Group. For the first time, the 3Q operating profit at 1,099 million (up 46%) topped the one billion mark. Further profitability improvements in all areas raised ROS after nine months from 8.2% to 10.7%.

Comments MAN CEO Hkan Samuelsson: 2007 will be an outstanding period for the MAN Group. It is growing at a double-digit rate; we have once more upgraded our profitability and created new jobs. All the business areas are continuing along the growth and internationalization course in their markets.

For all of 2007, an order intake increase of over 10% and a sales rise of 15% to 15 billion are expected. ROS is predicted to reach the 3Q level of 10.7%.

Order intake: non-German growth more vigorous than domestic
At 4.7 billion, Q3 orders advanced 17% over the year-earlier 4 billion. 3Q orders topped the year-earlier 12 billion by 19% to reach 14.3 billion. Once again, demand for MAN products abroad (up 20%) outpaced domestic demand (up 16%). Above all, Commercial Vehicles (up 25%) and Diesel Engines (up 21%) showed strong gains in the period January through September. Whereas Trucks business mounted by 28%, Buses, down in the first half (H1), recovered in Q3 to show a 3-quarter growth of 6%. For 3Q/2007, demand for turbo machinery was 11% short of the year-earlier level, which, however, had included a megacontract for the Shell Pearl GTL plant. Industrial Services raised its order intake by 9%.

Sales: all manufacturing areas with double-digit gains
The sharp rise in order intake and the order backlog, since January mounting to a record level of 14.5 billion (up 28%) are also reflected in significantly increased sales. Whereas Q3 sales rose 12% from 3.1 billion to 3.5 billion, 3Q sales climbed from 9.2 billion to 10.3 billion. All the manufacturing areas achieved double-digit hikes: Turbo Machinery (up 27%), Diesel Engines (up 15%), Commercial Vehicles (up 11%). Industrial Services sales inched up 3%.

Rising operating profit and ROS: Trucks and Diesel outstanding
The clear operating profit improvement in the first half of the year continued into the third quarter. The operating profit jumped 36% to 378 million (up from 278 million). The 3Q operating profit surged by 348 million (up 46%) to 1,099 million. As a consequence, ROS improved from 8.2% to 10.7%. Excluding the Scania dividend (43 million), to 10.3%.

All business areas shared in the MAN Groups improved profitability. Commercial Vehicles raised its operating profit through high capacity utilization at the plants and service stations and repeated efficiency measures by 172 million, from 474 million to 646 million, equivalent to an ROS advance from 7.7% to 9.5%. Whereas Trucks achieved an ROS of 11.1%, idle capacities and poorer margins at Buses led to an operating loss of 19 million (down from a black 32 million). Q3 saw the introduction of further measures aimed at improving, in particular, the production network.

Diesel Engines ROS after nine months was the best among the manufacturing areas: a 33-percent higher operating profit, from 157 million to 209 million, produced an ROS of 13.9% (up from 11.9%). With capacity utilization very high and margins improved, Turbo Machinery upgraded its operating profit from 46 million to 67 million, equivalent to an ROS rise from 7.6% to 8.8%. Mainly because of invoice timing reasons, the operating profit at Industrial Services mounted 20 million to 97 million, this area's 3-quarter ROS climbing from 8.3% to 10.0%.

The MAN Groups 3Q EBT shot up from 707 million to 1,305 million, including 241 million as nonrecurring Q2/2007 result*. Earnings after taxes climbed from 677 million to 894 million. Earnings per share (EpS) of continuing operations improved from 3.51 to 5.07, including the nonrecurring items from 3.51 to 5.98.

Growth generates jobs
At September 30, 2007, the MAN Group employed a workforce of 51,913, an extra 1,623 versus the 50,290 at December 31, 2006. The additional manpower was recruited to cope with rising business in the manufacturing areas and the resulting growth plans. Commercial Vehicles employed an additional 972 persons, chiefly in connection with the setting-up of the Polish plant and the organization of the Russian sales network. Diesel Engines (up 339), Turbo Machinery (up 228) and RENK (up 144) all hired additional labor.

In Germany, the MAN Group employed 30,031 persons at September 30, 2007 (up from 29,399 at December 31, 2006), abroad 21,882 (up from 20,891). As a consequence, an unchanged 42% were employed outside of Germany. Loaned/temporary labor added up to 4,122 (at September 30, 2007) due to the heavy workload (20% up over the 3,425 at December 31, 2006).

 *Nonrecurring result in Q2/2007: net balance of provision and write-down for Buses, damages from the ERF litigation with Freightliner, and the Scania stock split and stock repurchase